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Asia and Pacific > India

You are looking at 1 - 10 of 21 items for :

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Cover IMF Working Papers
Inequality and the Structure of Countries’ External Liabilities
Philipp Harms
,
Mathias Hoffmann
,
Miriam Kohl
, and
Tobias Krahnke
In this paper, we present empirical evidence that higher income inequality is associated with a greater equity share in countries' external liabilities, and we develop a theoretical model that can explain this observation: In a small open economy with traded and nontraded goods, entry barriers depress entrepreneurial activity in nontraded industries and raise income inequality. The small number of domestic nontraded-goods firms leaves room for foreign firms to operate on the domestic market, and it reduces external borrowing. The model suggests that barriers to entrepreneurial activity could be conducive to attract equity-type capital inows. Our empirical results lend some support to this conjecture.
Keywords:
Portfolio Equity; Foreign direct investment; External debt; External liabilities; Income Inequality; entry barrier; equity share; barriers to entrepreneurial activity; traded-goods firm; Income; Portfolio investment; Self-employment; South Asia; East Asia; Foreign corporations
Cover IMF Working Papers
Corporate Sector Resilience in India in the Wake of the COVID-19 Shock
Lucyna Gornicka
,
Ms. Sumiko Ogawa
, and
Ms. TengTeng Xu
To assess the resilience of India’s corporate sector against COVID-19-related shocks, we conducted a series of stress tests using firm-level corporate balance sheet data. The results reveal a differential impact across sectors, with the most severe impact on contact-intensive services, construction, and manufacturing sectors, and micro, small, and medium enterprises. On policy impact, the results highlight that temporary policy measures have been particularly effective in supporting firm liquidity, but the impact on solvency is less pronounced. On financial sector balance sheets, we found that public sector banks are more vulnerable to stress in the corporate sector, partly due to their weaker starting capital positions. When considering forward-looking multiperiod growth scenarios, we find that the overall corporate performance will depend on the speed of recovery. A slower pace of recovery could lead to persistently high levels of debt at risk, especially in some services and industrial sectors.
Keywords:
balance sheet data; micro firm; firm liquidity; firm's equity; firm's ability; manufacturing firm; Stress testing; Corporate sector; COVID-19; Financial statements; Solvency stress testing; Global
Cover IMF Working Papers
A Sentiment-Enhanced Corruption Perception Index
Yongquan Cao
,
Ms. Yingjie Fan
,
Sandile Hlatshwayo
,
Monica Petrescu
, and
Zaijin Zhan
Direct measurement of corruption is difficult due to its hidden nature, and measuring the perceptions of corruption via survey-based methods is often used as an alternative. This paper constructs a new non-survey based perceptions index for 111 countries by applying sentiment analysis to Financial Times articles over 2005–18. This sentiment-enhanced corruption perception index (SECPI) captures not only the frequncy of corruption related articles, but also the articles’ sentiment towards corruption. This index, while correlated with existing corruption perception indexes, offers some distinct advantages, including heightened sensitivity to current events (e.g., corruption investigations and elections), availability at a higher frequency, and lower costs to update. The SECPI is negatively correlated with business environment and institutional quality. Increases in the perceived incidence or scope of corruption influences economic agents’ behaviors, and thus economic dynamics. We found that when the SECPI is at least one standard deviation above the mean, the growth per capita falls by 0.65 percentage point on average, with more pronounced impacts for emerging market and low income countries.
Keywords:
sentiment analysis method; perception index; statistic department; articles' sentiment; summary statistics; Corruption; Emerging and frontier financial markets; Business environment; Global
Cover IMF Staff Country Reports
Central African Republic: First and Second Reviews Under the Extended Credit Facility Arrangement and Request for Waivers of Nonobservance of Performance Criteria-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for the Central African Republic
International Monetary Fund. African Dept.
The Covid-19 pandemic had a substantial impact on C.A.R.’s economy but appears now somewhat contained. The number of positive cases and related deaths has been very limited over the last few months, even though most containment measures have been progressively loosened. Despite some progress since the February 2019 peace agreement, the security situation remains precarious. Despite some delays in voter registration, the first round of the presidential and general elections is still scheduled on December 27.
Keywords:
ISCR; CR; asset declaration law; staff appraisal; staff statement; assessment of policy issue; CAR authorities; assessment of the ability; COVID-19; Arrears; Global
Cover IMF Working Papers
Taxation and the Peer-to-Peer Economy
Aqib Aslam
and
Ms. Alpa Shah
The growth of the peer-to-peer (P2P) economy over the last decade has captivated both stock markets and policymakers alike. While the means for transacting might be different to existing firm structures—with the emergence of digital platforms that connect individual buyers and sellers directly—the tax behavior of individuals operating in this new economy are very familiar. What is clear is that while the P2P economy has potentially exacerbated existing policy, administrative, and revenue-mobilization challenges associated with small business taxation—such as the choice of the tax base and how to set tax thresholds—, the technology behind P2P platforms presents a valuable opportunity to eventually solve them.
Keywords:
WP; tax treatment; value-added tax; gross income; flat rate; goods and services tax; Digital platforms; direct tax; indirect tax; peer-to-peer markets; tax compliance; transaction costs; tax liability; Sharing economy; Personal income; Small and medium enterprises; Income tax systems; Income and capital gains taxes; Global
Cover IMF Working Papers
Does the Business Environment Affect Corporate Investment in India?
Kiichi Tokuoka
Since the global financial crisis, corporate investment has been weak in India. Sluggish corporate investment would not only moderate growth from the demand side but also constrain growth from the supply side over time. Against this background, this paper analyzes the reasons for the slowdown and discusses how India can boost corporate investment, using both macro and firm-level micro data. Analysis of macro data indicates that macroeconomic factors can largely explain corporate investment but that they do not appear to account fully for recent weak performance, suggesting a key role of the business environment in reviving corporate investment. Analysis of micro panel data suggests that improving the business environment by reducing costs of doing business, improving financial access, and developing infrastructure, could stimulate corporate investment.
Keywords:
WP; firm; panel data; real GDP; Corporate investment; Business environment; Costs of doing business; Infrastructure; corporate investment; investment function; business cost; investment in India; firm size dummy; Gross fixed investment; Real interest rates; Global
Cover IMF Working Papers
Sources of Corporate Profits in India: Business Dynamism or Advantages of Entrenchment?
Michael Walton
,
Anusha Nath
, and
Mr. Ashoka Mody
Some see India’s corporate sector as the fundamental driver of recent and future prosperity. Others see it as a source of excessive market power, personal enrichment, and influence over the State, with an ultimately distorting influence. To inform this debate, this paper analyses the correlates of profitability of firms listed on the Bombay Stock Exchange, covering a dynamic period-in terms of firm entry and growth-from the early 1990s to the late 2000s. Overall, the results do not provide support for the systematic exercise of market power via the product market. At least for this period, the story is more consistent with a competitive and dynamic business sector, despite the continued dominance of business houses and public sector firms in terms of sales and assets. Those with opposing views can, with justification, argue that our analysis does not cover influences, such as corporate governance and state-corporate relations, which may paint a less flattering picture of the corporate sector’s role. Those broader themes deserve further attention.
Keywords:
WP; business house; profit rate; BSE firm; sales growth; market power; Corporate sector; India; profitability; growth; firm growth; Housing; Business enterprises; Competition; Global
Cover IMF Staff Country Reports
Bhutan: Statistical Appendix
International Monetary Fund
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
Keywords:
ISCR; CR; debt service; capital account; convertible currency; Bhutan Board product; mineral products incl.stone; Bhutan fruit product; handicrafts products incl.; Agricultural commodities; Metals; Business enterprises; Interest payments; Exports; Europe
Cover IMF Staff Country Reports
India: Selected Issues
International Monetary Fund
Despite the external origin of the financial crisis, the potential impact on India’s corporate sector could be large, as India has become increasingly integrated with the global economy in the past decade. The Selected Issues paper discusses India’s economic development and policies. The impact on the corporate sector will in turn feed into India’s overall economic growth. The significant volatility in the exchange equity prices, and interest rates triggered by the global crisis, together with the decline in global economic activity and capital flows, will weight on India’s firms.
Keywords:
ISCR; CR; pass-through; inflation; India; return; debt; government; pass-through elasticity; asset price volatility; volatility matter; flows to India; pass-through elasticities rise; Corporate sector; Debt default; Capital flows; Fiscal rules; Exchange rate pass-through; Global; Asia and Pacific
Cover IMF Working Papers
Financial Development and Growth in India: A Growing Tiger in a Cage?
Ms. Hiroko Oura
This paper examines the efficiency of the different segments of India's financial system using firm-level data on corporate financing patterns. Firms are increasingly relying on external funds to finance their investment in most recent years. Empirical analyses indicate that (1) the financial system in India is not channeling funds into industries with higher external finance dependence; (2) the debt financing system does not allocate funds according to firms' external finance dependence, while equity financing system does; and (3) firms in an industry that are more dependent on external finance grow more slowly.
Keywords:
WP; firm; fund; firm growth